What’s the Difference Between Open Banking, a Securities License, and a Digital Bank?

If you work in tech, finance, or legal—chances are you’ve heard these terms thrown around: Open Banking, Securities License, Digital Bank.

They all sound like parts of the same puzzle. But in reality, they serve very different purposes and operate under entirely different regulatory models.

Here’s a quick breakdown to clarify the confusion:

Open Banking – Empowering Data Portability

What is it?Open Banking is a regulatory framework that allows customers to share their banking data—with explicit consent—with third-party apps and fintech services via secure APIs.

Who is it for?Fintech startups, budgeting tools, credit platforms, or payment apps that want to access financial data (balances, transactions, etc.) from banks or credit card providers.

Is it a license?Not exactly. Open Banking is a regulated system, and in many jurisdictions (including Israel), third parties must obtain a financial information license or equivalent to legally access user data.

Regulator: Usually the central bank or a financial authority (e.g., Bank of Israel, FCA in the UK, EBA in the EU).

Securities License – For Investment & Trading Services

What is it?A Securities License authorizes firms to engage in activities like:

• Investment advisory

• Portfolio management

• Securities trading (stocks, bonds, ETFs)

• Marketing and distributing financial products

Who is it for?Brokerages, robo-advisors, wealth management platforms, capital market players.

How is it different from Open Banking?Open Banking is about sharing bank data.A Securities License is about actively managing or advising on investments.

Regulator: Usually a Securities Authority (e.g., SEC in the U.S., Israel Securities Authority).

Digital Bank – A Full Bank With No Physical Branches

What is it?A Digital Bank offers the full range of banking services—checking accounts, cards, loans, deposits—entirely online. Think of it as a full-fledged bank, but without the brick-and-mortar.

Is it just another fintech app?No. A digital bank is a fully licensed bank, regulated like traditional banks, but with a digital-first model focused on UX, personalization, and operational efficiency.

Regulator: The central bank, with strict requirements for capital, risk management, compliance, and consumer protection.

Examples:Revolut, Monzo, N26, GXS Bank (Singapore), The First Digital Bank (Israel)

Why Does It Matter?

In a world of API-first services and digital wallets, understanding the difference between these models is crucial:

• Not every fintech is a bank

• Not every app with a slick UI is licensed to give financial advice

• Not every "digital" service can actually hold your money

As regulation evolves, clarity is power—for companies, investors, and customers alike.